Indian CRDMOs timed their IPOs proper. However is the enterprise well worth the premium?


An anticipated shift within the world pharmaceutical provide chain away from China has traders enthusiastic about Indian contract analysis, improvement and manufacturing organisations (CRDMOs), firms that supply providers from early-stage drug discovery to late-stage drug improvement.

Export-focused CRDMOs together with Anthem Biosciences, Sai Life Sciences and Divi’s Laboratories are buying and selling at costly valuations, reflecting investor enthusiasm as innovator drug firms take a look at diversifying and derisking their operations. Nonetheless, consultants cautioned that whereas CRDMOs are anticipated to publish excessive progress, their monetary performances have but to mirror it.

Bengaluru-based Anthem Biosciences made a stellar debut on the inventory exchanges on 21 July, itemizing on the Nationwide Inventory Alternate at a premium of 27 p.c over its preliminary public providing value of 570. The IPO, with a difficulty measurement of 3,395.79 crore, was subscribed 67.42 occasions. Anthem’s inventory traded at a price-to-earnings (PE) ratio of 93.24 on 25 July.

“The excellent news is that… China is a behemoth. So, we’ve that a lot headroom to develop,” Ajay Bhardwaj, managing director and chief government officer, informed Mint earlier.

Additionally Learn | Contract drug makers are booming, and Anthem’s IPO simply turned up the warmth

About 65% of India’s imported bulk medication and superior drug intermediates value $3.5 billion in FY25 got here from China, based on the commerce ministry. The federal government desires to strengthen native manufacturing by way of an upgraded medication production-linked incentive scheme because it pushes for self-sufficiency in bulk medication that go into manufacturing medicines.

The Indian CRDMO business immediately is value $3-3.5 billion, making up solely 2-3% of the worldwide CRDMO market, which is value $145 billion. It grew at a compound annual progress price of 15% from 2019-2024, based on a latest report by BCG and IPSO.

The business is at a tipping level, with robust fundamentals and large headroom to develop, fueled by aggressive benefit in small molecule capabilities, sooner startup time, deal with high quality and price benefits, the report famous.

Not like CRDMOs, CDMOs (contract improvement and manufacturing organisations) are sometimes concerned in manufacturing already commercialised medication.

Premium buying and selling

Sai Life Sciences, which made its market debut in December 2024, traded at 837 on 25 July, near its excessive of about 851, valuing the corporate at roughly 102 occasions trailing earnings and about 8.2 occasions e book worth.

Divi’s Laboratories and Syngene Worldwide additionally traded at premiums, at a PE ratio of 80.31 and 55.09, respectively. As compared, generic pharmaceutical giants are valued comparatively modestly: Solar Pharmaceutical Industries trades at a PE ratio of 37.37, Dr Reddy’s Laboratories at 18.84, and Cipla at 23.53.

Sai Life Sciences shares are up over 18% since itemizing on the NSE. Divi’s Laboratories gained 35.56% from 30 July 2024 to twenty-eight July 2025, Piramal Pharma rose 20.36%, whereas Syngene Worldwide’s shares have been down 12.72%.

Syngene Worldwide, a unit of biopharmaceutical firm Biocon, kicked off this fiscal’s earnings season final week. It posted an 11% year-on-year rise in income from operations to 875 crore for Q1, a strong begin in comparison with its FY25 efficiency (4% income progress YoY). The administration maintained its expectation of income progress within the mid‑teenagers for FY26.

Additionally Learn | Piramal Pharma to see muted CDMO progress on US jitters; robust restoration in FY27

Sai Life Sciences delivered 16% income progress to 1,695 crore in FY25. Divi’s reported a 19% year-on-year rise in full-year income to 9,360 crore in FY25, whereas web revenue surged 37% to 2,191 crore.

Divi’s is predicted to publish income progress of 18% year-on-year in Q1FY26, based on brokerage BNP Paribas.

“The Indian CDMO sub-sector presents a extremely promising alternative as traders view it as a direct beneficiary of the China+1 thematic,” Sunil Khaitan, managing director main financing in India at Goldman Sachs, informed Mint. “We anticipate the capital markets exercise on this house to additional speed up over the subsequent 6-12 months.”

What’s acquired traders excited?

The China-plus one theme – to diversify provide chains and cut back overdependence on China – is a key driver, however it’s not simply that.

CRDMOs are on an aggressive capability enlargement monitor as they anticipate successful over extra shoppers sooner or later and financial institution on technological niches to cater to biotech firms as demand for brand new applied sciences and medicines grows.

Anthem has experience in new chemical entities in addition to biologics (medication constituted of dwelling organisms or their elements) and capabilities to work on RNAi (a gene regulatory mechanism), antibody drug conjugates that focus on and kill most cancers cells, peptides (quick chains of amino acids), lipids, and oligonucleotides (synthesised nucleic acids).

OneSource Specialty Pharma, a subsidiary of Strides Pharma, which listed in January, expects its deal with area of interest areas comparable to biologics, drug substances, injectables, and drug-device mixtures to drive progress. Its choices in drug-device mixtures, notably for GLP-1s (hormones that regulate blood sugar ranges), which are sometimes offered in pen-filled gadgets, is predicted to be a significant progress alternative.

“We’re presently executing a 5x enlargement of our cartridge-filling capabilities to fulfill our buyer demand and which can considerably increase future income,” CEO Neeraj Sharma informed Mint in an emailed response.

Anthem Biosciences and Sai Life Sciences didn’t reply to Mint’s queries.

Traders are taking a look at CRDMOs not only for potential progress pushed by these tailwinds but additionally as diversification of their portfolios, consultants mentioned. Alternatives in conventional pharma firms with a deal with home formulations and US generics are drying up due to a slowdown in new approvals and regulatory points.

“The investor wish to have publicity to firms and segments which have the potential for top progress and themes of shifting manufacturing from China to India,” Tausif Shaikh, healthcare and pharma analyst at BNP Paribas, informed Mint.

Are the valuations value it?

Whereas CRDMOs have reported regular, mid-teen income progress, their efficiency has not been encouraging sufficient at the same time as valuations stay costly, Shaikh identified.

Not like sectors comparable to healthcare providers, the place one can gauge an organization’s efficiency based mostly on metrics like hospital mattress occupancy and common income per mattress, for contract drug producers, administration commentary is the principle indicator of the corporate’s anticipated progress and efficiency, mentioned Shaikh.

Most firms report an uptick in curiosity from innovators to rent their providers and have launched into aggressive capability enlargement. Syngene plans to spice up its biologics manufacturing footprint in FY26 by way of its newly acquired US facility for $36.5 million.

Additionally Learn | Zydus buys Agenus’ biologics crops in US for $125 mn, licenses most cancers remedy

Divi’s Laboratories is enterprise a 650-700 crore capability enlargement at its current amenities, whereas Sai Life Sciences has accomplished the second part of its Bidar Unit IV capability enlargement for small-molecule lively pharmaceutical elements and intermediates.

On the again of this, the expansion outlook stays robust.

“Earnings are anticipated to be robust for export-oriented CDMOs for the subsequent 2-3 years contemplating the capex tasks and potential addition of latest molecules,” Shrikant Akolkar, pharma fairness analysis analyst at brokerage Nuvama, informed Mint.

Nonetheless, the CDMO enterprise is non-linear, Akolkar mentioned, including that one should take note of the annual efficiency and never a few quarters of quantity misses.



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